ASPPA Counters Retirement Plan Fee Analysis

May 31, 2012 (PLANSPONSOR.com) – The American Society of Pension Professionals & Actuaries (ASPPA) is challenging the assumptions behind a report about retirement plan fees.

A report from think tank Demos claimed that a two-earner household, in which each partner earns the median income for their gender each year over their working lifetime, will pay an average of $154,794 in 401(k) fees and lost returns. A higher-income dual-earner household, in which each partner earns an income greater than three-quarters of Americans each year, can expect to pay an even steeper price: as much as $277,969 (see "Retirement Plan Fees Consume 30% of Assets").

Brian H. Graff, CEO and Executive Director of the ASPPA, contends that Demos inflated those figures. He said the organization estimated fees for mutual funds in 401(k)s at 200 basis points (2%) of plan assets, a level which he called “ridiculous.”

Graff also challenged Demos’ claim that the new Department of Labor (DOL) disclosure requirements are not enough to ameliorate fees. He says retirement service providers will have to lower their fees due to increased competition once fee information goes public with the new law.